Skip to main content Accessibility help
×
Hostname: page-component-7bb8b95d7b-dtkg6 Total loading time: 0 Render date: 2024-10-06T23:15:00.479Z Has data issue: false hasContentIssue false

5 - Capital accumulation and the realization of profits

Published online by Cambridge University Press:  21 September 2009

Christos Pitelis
Affiliation:
Pädagogische Akademie, Graz, Austria
Get access

Summary

At the aggregate level the tendency towards SOMP will tend to result in an increasingly higher proportion of private disposable income being controlled by the corporate sector; a direct product of the appearance and growth of (direct and indirect) shareholding. Ceteris paribus this will tend to result in an increasingly higher proportion of private disposable income being retained within the corporate sector, in the form of corporate retained earnings and/or the net inflow to life and pension funds. With less than perfect substitutability between personal and corporate saving, the above will tend to reduce the share of consumers' expenditure to private disposable income. In this sense the tendency towards SOMP will tend to introduce an underconsumptionist tendency in advanced capitalist economies, a situation where consumers' expenditure is insufficient to buy the full capacity (consumption goods) product of the corporate sector.

An underconsumptionist tendency contains the seeds of a realization failure, a situation where the total effective demand of the private sector, consumption plus investment, is insufficient to absorb the full capacity (consumption and production goods) product of the corporate sector, thus failing to realize the potential profits of firms. The above need not be the case if private investment increases sufficiently to compensate for the tendency of consumption to decline. Assuming that capitalist firms produce for profits rather than consumption, the latter is a possibility, necessitating the analysis of the determinants of private investment.

Type
Chapter
Information
Corporate Capital
Control, Ownership, Saving and Crisis
, pp. 77 - 110
Publisher: Cambridge University Press
Print publication year: 1987

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Save book to Kindle

To save this book to your Kindle, first ensure coreplatform@cambridge.org is added to your Approved Personal Document E-mail List under your Personal Document Settings on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part of your Kindle email address below. Find out more about saving to your Kindle.

Note you can select to save to either the @free.kindle.com or @kindle.com variations. ‘@free.kindle.com’ emails are free but can only be saved to your device when it is connected to wi-fi. ‘@kindle.com’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.

Find out more about the Kindle Personal Document Service.

Available formats
×

Save book to Dropbox

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Dropbox.

Available formats
×

Save book to Google Drive

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.

Available formats
×